M/S. ITO 20(2)(1), MUMBAI V. THE DINESH MAHESHWARI, MUMBAI

ITA 4025/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49174 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-05-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 06-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Depreciation
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI PRAMOD KUMAR, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 4025/MUM/2008 ASSESSMENT YEAR: 2001-02 INCOME TAX OFFICER, 20(2)(1), APPELLANT R.NO. 701, 7 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. VS. DINESH MAHESHWARI, RESPONDENT 504, 4 TH WING, ANMOL, NEAR HOTEL LEELA, MAROL PIPE LINE, OPP. MUKUND NAGAR, ANDHER (E), MUMBAI 400 059. (PAN AACPF5048H) APPELLANT BY : MR. C.G.K. NAIR RESPONDENT BY : MR. VIJAY KOTHARI . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- XX, MUMBAI, PASSED ON 21/03/2008 FOR THE AS SESSMENT YEAR 2001-02 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AN D IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE PENALTY O F RS. 3,,59,926/- BASED ON THE FACT THAT THE ADDITION IT SELF WAS DELETED BY HONBLE CIT(A) WHILE THE ADDITIONS HAS B EEN LATER CONFIRMED BY HONBLE ITAT 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE PENALTY O F RS. 3,59,926/- WHILE PENALTY HAS BEEN LEVIED ON THE GRO UND OF SUBMISSION OF INACCURATE PARTICULARS OF THE PURCHAS ES OF RS. 11,12,097/- AND HONBLE ITAT HAS HELD IN CLER CUT T ERMS VIDE ITS ITA NO. 4025/M/08 DINESH MAHESHWAR. 2 ORDER DT. 17/03/2008 THAT THE PURCHASES WORTH RS. 1 1,12,097/- WAS BOGUS. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO RESTORED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED U/S 143(3) OF THE ACT ON 22/03/04 OF THE ACT WHEREIN ADDITION WAS MADE ON ACCOUNT OF EXPENDITURE AMOUNTING TO RS. 11,12,097/- AND ON ACCOUNT OF MOTO R CAR EXPENSES AND DEPRECIATION AMOUNTING TO RS. 16,904/-. DURING THE COURSE OF SCRUTINY ASSESSMENT NOTICE U/S 133(6) WAS ISSUED TO M/S DEVANSHI TEXTILES FROM WHOM THE ASSESSEE HAD PURCHASED YARN AMOUNTING TO RS. 11,12,097/-. IN RESPONSE, M/S DEVANSHI TEXTILES STATED THAT THEY HAD NOT ENTERED INTO ANY KIND OF TRANSACTION WITH T HE ASSESSEE. FURTHER A CERTIFIED COPY OF THE LEDGER ACCOUNT OF M /S DEVANSHI TEXTILES IN THE BOOKS OF THE ASSESSEE WAS TAKE. ON PERUSAL O F THE LEDGER ACCOUNT IT WAS NOTICED THAT THE ASSESSEE HAD PURCHA SED GOODS FROM M/S DEVANSHI TEXTILES AMOUNTING TO RS. 11,112,097/- BY WAY OF TWO PURCHASE BILLS OF RS. 5,13,625/- AND RS. 5,98,472/- AND PAYMENTS IN RESPECT OF THE PURCHASES WERE MADE THROUGH 13 CHEQU ES. PHOTOCOPIES OF 13 CHEQUES CLAIMED TO BE PAID TO M/S DEVANSHI TE XTILES WERE OBTAINED FROM THE BANK AND IT WAS OBSERVED THAT NON E OF THEM WERE ACCOUNT PAYEE CHEQUES AND NONE OF THE 13 CHEQUES HA D THE NAME OF M/S DEVANSHI TEXTILES AS BENEFICIARY. ON BEING ASKE D TO RECONCILE THE FINDINGS BY THE AO, THE ASSESSEE STATED THAT DUE TO ACCOUNTING ERROR PURCHASES FROM M/S DEV SYNTHETICS WAS WRONGLY POSTE D TO IN THE ACCOUNT OF M/S DEVANSHI TEXTILES AND TO THIS EFFECT , THE ASSESSEE SUBMITTED A COPY OF CORRECT LEDGER ACCOUNT ALONG WI TH PHOTOCOPY OF PURCHASE BILLS OF M/S DEV SYNTHETICS. THE AO POINTE D OUT THAT THERE WAS NO SALES TAX REGISTRATION NO. NOR TELEPHONE WAS PRINTED ON THE PURCHASE BILLS. THE BILLS WERE JUST COMPUTER GENERA TED PAPERS AND NO PAN WAS QUOTED OF M/S DEV SYNTHETICS. FURTHER, STAT EMENT OF THE ASSESSEE WAS RECORDED U/S 131, AND THE RELEVANT QUE STION AND ANSWER OF THE STATEMENT, WAS REPRODUCED AT PAGE 3 OF THE P ENALTY ORDER. AFTER ITA NO. 4025/M/08 DINESH MAHESHWAR. 3 CONSIDERING THE SUBMISSIONS AND STATEMENT RECORDED U/S 131, THE AO HELD THAT THE ASESSSEE HAD NOT MADE ANY PURCHASES F ROM M/S DEV SYNTHETICS. THE LEDGER ACCOUNT AND PURCHASE BILLS H AVE BEEN INVENTED BY THE ASSESSEE HIMSELF TO SHOW LOW PROFIT. ACCORD INGLY, RS. 11,12,097/- WAS ADDED TO THE INCOME OF THE ASESSSEE BY TREATING THE TRANSACTION WITH M/S DEV SYNTHETICS AS A SHAM TRANS ACTION. ON APPEAL, THE CIT(A) DELETED THE ADDITION MADE BY THE AO. THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF RS. 3,59,926/- BEING 100% OF TH E TAX SOUGHT TO BE EVADED. THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A) AND THE CIT(A) DELETED THE PENALTY LEVIED BY THE AO . AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US . 3. BEFORE US, THE LEARNED DR HAS CANVASSED THAT THE ITAT IN QUANTUM APPEAL HAS CONFIRMED THE ADDITION OF RS. 11 ,12,097/- MADE BY THE AO VIDE ITA NO. 2660/MUM/05 ORDER DATED 17 TH MARCH, 2008, A COPY OF WHICH HAS BEEN FILED ON RECORD. THE DR, THE REFORE, CONTENDED THAT THE CIT(A) DELETED THE PENALTY LEVIED BY THE A O WITHOUT CONSIDERING THE ORDER PASSED BY THE ITAT IN THE QUA NTUM APPEAL. 4. AFTER HEARING THE LEARNED COUNSEL FOR THE ASSESS EE, WE FIND THAT THE ITAT HAS CONFIRMED THE ADDITION OF RS. 11,12,09 7/- MADE BY THE AO IN THE QUANTUM APPEAL. SINCE THE CIT(A) HAS DEL ETED THE PENALTY WITHOUT CONSIDERING THE ORDER PASSED BY THE ITAT IN QUANTUM APPEAL, WE REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE UNDER CONSIDERATION AFTER CONSIDER ING THE QUANTUM APPEAL OF THE ITAT (SUPRA) AND IN ACCORDANCE WITH L AW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES . ITA NO. 4025/M/08 DINESH MAHESHWAR. 4 5. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JUNE, 2011. SD/- SD/- (PRAMOD KUMAR) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 22 ND JUNE, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.